The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser's perspective. Sellers' and purchasers' prices may differ due to government subsidies, sales and excise taxes, and distribution costs.

The producer price indexes is obtained through the systematic sampling of industries. In the mining and manufacturing sectors, price information from virtually every industry is captured. By contrast, although PPI coverage of the service sector of the economy is substantial (more than 70 percent), it remains incomplete. The PPI program also includes data that track other sectors of the economy: agriculture, fishing, forestry, utilities (natural gas and electricity), and construction. As of January 2014, the PPI program included the following indexes:

Price indexes for approximately 535 mining, forestry, utility, construction, manufacturing, and services industries; over 500 indexes for groupings of industries; and more than 4,000 indexes for specific within-industry product and service categories;

More than 3,700 commodity price indexes for goods and about 800 for services (seasonally adjusted and not seasonally adjusted), organized by product, service, and end use;

Over 600 indexes for aggregate measures of price change, including the aggregation system for final demand–intermediate demand (FD–ID).

Together, these elements constitute a system of price measures designed to meet the need for both aggregate information and detailed applications, such as following price trends for specific industries and products, as well as the need for tracking price movements at a more aggregated level relative to the overall economy.

Universe

The PPI universe consists of the output of all industries in the goods-producing sectors of the U.S. economy—mining, manufacturing, agriculture, fishing, and forestry—as well as the output of the natural gas, electricity, and construction industries. Recycled goods that compete with those made in the goods-producing sectors, such as waste and scrap materials, also are outputs that are part of the survey. Imports no longer are included within the PPI universe; however, the BLS International Price Program publishes price indexes for both imports and exports. (See chapter 15.) Goods shipped between establishments owned by the same company (termed interplant or intracompany transfers) are included, as is a substantial percentage of the domestic production of goods specifically made for the military.

Classifications

There are three main PPI classification structures which draw from the same pool of price information provided to the BLS by cooperating company reporters:

Industry classification. A Producer Price Index for an industry is a measure of changes in prices received for the industry's output sold outside the industry (that is, its net output). The PPI publishes approximately 535 industry price indexes in combination with over 4,000 specific product line and product category sub-indexes, as well as, roughly 500 indexes for groupings of industries. North American Industry Classification System (NAICS) index codes provide comparability with a wide assortment of industry-based data for other economic programs, including productivity, production, employment, wages, and earnings.

Commodity classification. The commodity classification structure of the PPI organizes products and services by similarity or material composition, regardless of the industry classification of the producing establishment. This system is unique to the PPI and does not match any other standard coding structure. In all, PPI publishes more than 3,700 commodity price indexes for goods and about 800 for services (seasonally adjusted and not seasonally adjusted), organized by product, service, and end use.

Commodity-based Final Demand-Intermediate Demand (FD-ID) System. Commodity-based FD-ID price indexes regroup commodity indexes for goods, services, and construction at the subproduct class (six-digit) level, according to the type of buyer and the amount of physical processing or assembling the products have undergone. The PPI publishes over 600 FD-ID indexes (seasonally adjusted and not seasonally adjusted) measuring price change for goods, services, and construction sold to final demand and to intermediate demand. The FD-ID system replaced the PPI stage-of-processing (SOP) system as PPI's primary aggregation model with the release of data for January 2014. The FD-ID system expands coverage in its aggregate measures beyond that of the SOP system by incorporating indexes for services, construction, exports, and government purchases.